Imprecision as an Account of the Preference Reversal Phenomenon

Butler, David J., and
Graham C. Loomes. 2007. "Imprecision as an Account of the Preference Reversal Phenomenon."
American Economic Review,
97(1): 277-297.

DOI: 10.1257/aer.97.1.277

Abstract

Many individuals' choices and valuations involve a degree of uncertainty/imprecision.
This paper reports an experiment designed to obtain some measure of
imprecision and to examine the extent to which it can explain preference reversals
of two opposite forms, one of which appears not to have been reported previously.
The model of imprecision we examine not only predicts both patterns but also
provides an account of earlier results that are otherwise not well explained. The
results suggest that any successful descriptive theory of choice and valuation will
need to allow in some way for the imprecision surrounding people's decisions. (JEL
C91, D11, D81)